What is the nominal rate of interest given a real rate of interest of 5% and an inflation rate of 7%?
A) 12.0%.
B) 2.0%.
C) 12.35%.
D) 1.90%.

Name: What is the nominal rate of interest given a real rate of interest of 5% and an inflation rate of 7%? A) 12.0%. B) 2.0%. C) 12.35%. D) 1.90%.
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Question

Quizplus · Accepted Answer

Nominal interest rate = Real interest rate + Inflation rate
Nominal interest rate = 5% + 7%
Nominal interest rate = 12%.
Therefore, the nominal interest rate is 12%, which is option C.

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